English Court Rules That Foreign Companies Must Produce Documents To The SFO In Response To A Section 2 Notice If There Is A 'Sufficient Connection' With England

In a recent judgment1 , the English High Court has held that where the Serious Fraud Office ("SFO") issues a notice ("Notice") for the production of documents pursuant to section 2(3) of the Criminal Justice Act 1987 ("CJA") on a foreign company, that foreign company must produce those documents where there is a "sufficient connection" between it and the jurisdiction.

This judgment has important implications for foreign parent companies of subsidiaries that are under investigation by the SFO, where that parent company holds documents potentially relevant to the investigation. Care will have to be taken to determine whether a "sufficient connection" exists such that the parent company must comply with any notice issued to it pursuant to section 2(3) of the Act.

Background

On 28 April 2017 the SFO opened an investigation into a UK registered company, Kellogg Brown and Root Ltd ("KBR Ltd") in relation to the SFO's ongoing investigation into Unaoil. KBR Ltd's parent company is KBR, Inc ("KBR"), a company registered in the US. On 25 July 2017 a meeting in London with the SFO to discuss the investigation was attended by, amongst others, a senior officer of KBR. At this meeting the SFO handed over to the senior officer of KBR a notice pursuant to section 2(3) CJA ("the Notice"), requiring that it hand over certain categories of documents to the SFO.

KBR brought an application seeking permission for judicial review and, if permission was granted, the quashing of the Notice. The application was heard in April 2018 by the High Court, consisting of Lord Justice Gross and Mr Justice Ouseley. The judgment of Gross LJ, with which Ouseley J agreed, was handed down on 6 September 2018.

Permission having been granted for judicial review, KBR challenged the Notice on three grounds:

It was ultra vires as it requested material held outside the (UK) jurisdiction from a company incorporated in the US (i.e., KBR); ("Ground I: Jurisdiction"); It was an error of law on the part of the Director of the SFO to exercise his s.2 CJA 1987 powers despite his having power to seek mutual legal assistance ("MLA") from the US authorities; ("Ground II: Discretion"); and The Notice was not effectively "served" by the SFO handing it to a "senior officer" of KBR who was temporarily present within the jurisdiction; ("Ground III: 'Service'"). Ground I: Jurisdiction

It being common ground that KBR did not carry on business in the UK (and so was not within the UK jurisdiction), KBR alleged that s. 2(3) CJA did not operate extraterritorially and that whilst in personam jurisdiction could be established (e.g. by the representative of KBR being physically present in the jurisdiction) this should not be confused with subject matter jurisdiction.

The SFO argued that if...